Securities code: Zhejiang Jiahua Energy Chemical Industry Co.Ltd(600273) stock abbreviation: Zhejiang Jiahua Energy Chemical Industry Co.Ltd(600273) No.: 2022015 Zhejiang Jiahua Energy Chemical Industry Co.Ltd(600273)
Announcement on authorization of futures trading quota in 2022
The board of directors and all directors of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this announcement, and bear individual and joint liabilities for the authenticity, accuracy and completeness of its contents.
Important content: on March 29, 2022, Zhejiang Jiahua Energy Chemical Industry Co.Ltd(600273) (hereinafter referred to as ” Zhejiang Jiahua Energy Chemical Industry Co.Ltd(600273) ” or “the company”) held the 16th meeting of the ninth board of directors, deliberated and adopted the proposal on authorization of futures trading quota in 2022. The board of directors agrees to authorize the company to use its own funds of no more than RMB 100 million to choose an appropriate time for raw material futures hedging and futures investment without affecting normal operation and legal compliance of operation. The chairman of the company is authorized to exercise the decision-making power within the above capital limit and be responsible for organizing the implementation. The authorization period is within 12 months from the date of deliberation and approval of the board of directors. Within the authorization period, the above quota can be used on a rolling basis. The proposal does not need to be submitted to the general meeting of shareholders for deliberation.
1、 Overview of futures trading of the company
Under the premise of controllable risk, the company plans to use its own funds of no more than 100 million yuan to choose an appropriate time for raw material futures hedging and futures investment without affecting normal operation and legal compliance of operation. The varieties of transactions are mainly raw materials required for production and operation and PVC products of the company. The purpose is to grasp the rhythm in the price fluctuation of the spot market, reduce the spot procurement cost and increase the company’s income.
2、 Transaction implementation
The company sets up a futures management team, which is composed of the chairman of the company, the general manager, the person in charge of Finance and the deputy general manager in charge of marketing. The chairman serves as the group leader, and the company’s procurement and marketing center is responsible for daily futures trading.
The main responsibilities of the group shall include:
(I) participate in the formulation of the company’s futures risk management system and risk management procedures;
(II) establish the futures operation plan and implement it according to the plan;
(III) check and supervise the overall implementation of futures business;
(IV) monitor and evaluate the risk status of futures positions.
The company’s personnel engaged in futures business must have written authorization. Authorization includes transaction authorization and transaction fund transfer authorization. The futures team shall maintain the independence and mutual restriction of authorized trading personnel and fund allocation personnel.
3、 Risk analysis and risk control measures
The main purpose of the company’s futures trading operation is to partially hedge the risk of rising raw material purchase price and increase the company’s income, but there will also be some risks:
1. Market risk: the futures market itself has a certain systematic risk. At the same time, the futures trading investment needs to make a certain prediction of the price trend. Once the price prediction is wrong, it may cause losses to the company.
2. Policy risk: the risk that major changes in laws, regulations and other policies of the futures market may cause market fluctuations or inability to trade.
3. Liquidity risk: limited by insufficient market liquidity in futures trading, the company may not be able to enter and exit the futures market at a favorable price.
4. Operational risk: futures trading is highly professional, with improper or failed operation, resulting in corresponding risks.
5. Technical risk: due to uncontrollable and unpredictable system failure, network failure and communication failure, the trading system operates abnormally, causing problems such as delay, interruption or data error of trading instructions, resulting in corresponding risks.
The company has formulated Zhejiang Jiahua Energy Chemical Industry Co.Ltd(600273) futures trading management system and other relevant internal control systems, and set a stop loss line to close the position and stop the loss when the loss reaches a certain proportion, and the upper limit of the loss shall not exceed RMB 100 million. However, if the relevant futures varieties fluctuate sharply, the possibility that the positions cannot be closed in time and the risk control fails cannot be ruled out, and the company may bear excess losses.
The company will carry out risk control and management in strict accordance with the provisions of relevant internal control systems, effectively prevent, discover and resolve risks, and ensure the relative safety of funds for futures trading.
4、 Opinions of independent directors
The independent directors believe that according to their own operating characteristics and the price fluctuation characteristics of raw materials, the company will choose an appropriate time to carry out raw material hedging business and futures investment without affecting the normal operation and legal compliance of operation, which will not affect the normal development of the company’s main business. At the same time, the company has established a futures trading management system and will carry out risk control and management in strict accordance with the provisions of relevant systems to effectively prevent, discover and resolve risks and ensure the relative safety of funds for futures trading. The company’s futures trading is in line with the interests of the company and shareholders, and there is no situation that damages the rights and interests of the company and minority shareholders. The board of directors agreed to the relevant contents of the 2022 futures trading limit.
5、 Impact on the company’s operation
In accordance with the principle of separating decision-making, implementation and supervision functions, the company establishes and improves the approval and implementation procedures of relevant investments to ensure the effective development and standardized operation of futures investment and ensure the safety of funds. Under the premise of complying with national laws and regulations and ensuring that the normal development of the company’s main business is not affected, futures trading will not affect the normal development of the company’s business.
It is hereby announced.
Zhejiang Jiahua Energy Chemical Industry Co.Ltd(600273) board of directors March 30, 2022
